Fo sometime I have been interested in understanding whatever...

Fo sometime I have been interested in understanding whatever happened to the customers that Appstablishment had from its relationship with Capricorn (Automotive) Co-op. When CRO aquired APPSTAB - where did the Capricorn customers go?

The reason this was important to me was that I was under an impression that aquiring APPSTAB would bring with it an immediate & large customer base.

However, I have heard absolutely nothng from the company about these customers since the merger / aquisition.

So I wondered had I mis-read the situation or assumed something that was never actually the fact!?

So, I have gone back to see what was said by the company leading up to and during the shareholder meeting at which APPSTAB was acquired, including (importantly) the independent report undertaken by Bentley's about the 'transaction' (ie: aquiring APPSTAB).

Below is a summary of what was documented. There is alot there, so I have highligted what I believe to be the pertinent commentary provided to shareholders.

Pay attention to the use of adverbs such as 'would' and 'will'.

I am interested in what others know about what has in fact occurred since.

EB

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Acquisition Update (post
The Company and its proposed merger partner, Appstablishment, continue to work together to complete
key compliance items necessary to finalise the acquisition of Appstablishment by the Company.
Given the complexity of the transaction and continued disruption to professional services, the completion
of the relevant documentation has been delayed. The Company now expects to complete the acquisition
according to the revised timetable below.

As previously stated, the merger will deliver in excess of ~$1 million in Research and Development grants
in FY2020, in addition to ~$500,000 in annual salesand a reduction in duplicate overhead costs to the
business.

Sources of revenue and expenses
Appstablishment’s primary source of incomehas been through the provision of software
development services provided to third parties and providing the software and support
services for intellectual property that serves as a transaction authorisation and payment
gateway for the Capricorn Co-op Society which is installed on more than 2,500 businesses
across Australia and New Zealand and income receivable from the government research
and development tax incentive scheme.
Primary expenses are wages and salaries related to the development staff team

Shareholder Notice of Meeting - 20 May 2021
1.11 Advantages of the proposals in the Acquisition Resolutions
The Directors are of the view that the following non-exhaustive list of advantages may be
relevant to a Shareholder's determination on how to vote on the Acquisition Resolutions:
a. the value of the combined businesses of Cirralto and Appstablishment is greater than the
sum of its individual parts as they are expected to benefit from cost synergies and the
streamlining of processes;
b. acquiring Appstablishment would eliminate the payment of licence fees for the proprietary
software the Company required to support the Spenda Platform and its other products,
enabling Cirralto to maximise its revenue and profit margins;
c. the Proposed Transaction will culminate in a merged entity that will directly own the key
proprietary software and intellectual property both domestically and internationally, which
is fundamental to enabling the deployment of software as a service (‘SaaS’) solutions and
the development of new intellectual property and software capabilities, providing more
security in the income generating capacity of the Company’s business going forward;
d. the proposed merged entity will own a combined business management application and
the SYNK’D platform (a software platform which enables businesses to connect applications
together to remove repetitious data entry and to automate information exchange)
(‘SYNK’D’) that will enable small and large businesses to share data simply and easily across
business-to-business (‘B2B’) and business-to-consumer (‘B2C’) channels, as well as integrate
17
each transaction into company financial systems to make accounting and compliance fast
and accurate, offering a complete solution to bring substantial productivity and cost savings
to its customers (‘Spenda Platform’);
e. the Proposed Transaction will provide access to Appstablishment’s existing customer base
and trading partners which can be a springboard from which Cirralto grows its business;
f. the acquisition of Appstablishment will provide access to a large pipeline of potential new
customers for the Spenda Platform andthe potential to substantially increase revenue from
its existing customer base;
g. Cirralto will benefit from the organisational structure and infrastructure of Appstablishment
that is capable of supporting growth and scaling operations, in addition to a team with
proven success in developing, marketing, implementing and commercialising software;
h. the Proposed Transaction should make the post-acquisition Cirralto more attractive to
investors as the ownership of the proprietary software and intellectual property both
domestically and internationally provides more security in the income generating capacity
of the Company’s business and offers the potential to open up substantial markets for the
development of new products and growth;
i. The license for share that the Company has negotiated with Appstablishment for the use of
the Spendia IP is based on approximately 45% of specific software income. If the proposed
Transaction is approved, there would be an immediate increase in the gross profit margin
of circa 45% going forward. The Company considers that it will be more cost beneficial to
inherit Appstablishment’s entire cost structure than to pay the license fees.
j. the Proposed Transaction is expected to create a larger and stronger company with
significant growth potential, quality assets, an established and proven management team,
an attractive SaaS distribution model and a business with diversified revenue streams;

20 May 2021 - Bentleys Independent Report - ("Summary of opinion")

In our opinion, the Proposed Transaction is fair and reasonable to Shareholders in the absence of
any alternative offers.
Notwithstanding that we provide a summary of our conclusion below, it should be noted that our
opinion should be read in conjunction with this Report in its entirety.
Fairness
We determined the value of a Cirralto share (on a 100% basis) before the Proposed Transaction to
be in the range of $0.0278 per share to $0.0317 per share with a midpoint of $0.0298 per share.
We determined the value of one share of the merged entity (on a minority basis) after the Proposed
Transaction to be in the range of $0.0296 per share to $0.0344 per share with a midpoint of
$0.0319 per share.
Since the value of a Cirralto share (on a minority basis) after the Proposed Transaction is greater
than the value of a Cirralto share (on a 100% basis) before the Proposed Transaction, we conclude
that the Proposed Transaction is fair.
Reasonableness
The Proposed Transaction is reasonable because it is fair.
We summarise the following significant factors which also provide sufficient reasons for
Shareholders to approve the Proposed Transaction in the absence of any alternative offers.
 The Proposed Transaction will culminate in a merged entity that will directly own the key
proprietary software and intellectual property for the SYNK’D and Spenda Platform both
domestically and internationally, which offers the potential to open up substantial markets
for the development of new products and growth. It is also fundamental to enabling the
further growth of SaaS solutions and the development of new intellectual property and
software capabilities.
 The Proposed Transaction will provide Cirralto with full control over the complete
intellectual property portfolio, which will provide more security in the income generating
capacity of the Company’s business going forward.
Cirralto Limited Page | iv
 The Proposed Transaction, which will result in Cirralto taking on full ownership of the
complete proprietary software and intellectual property portfolio both domestically and
internationally, will not only make Cirralto more attractive as a service provider to potential
clients but will also make Cirralto more attractive to potential acquirers for potential buyouts
in the future.
 Cirralto’s ability to generate income is heavily reliant on the proprietary software developed
by Appstablishment. The Proposed Transaction will remove Cirralto’s dependency on the
licence fee arrangement with Appstablishment, which would otherwise have a material
impact on the business if the Company is in a weaker bargaining position to renegotiatiate a
fair licence fee. Improving the risk return trade-off in this respect is likely to make Cirralto
more attractive to investors.
 The licence fee share that Cirralto has negotiated with Appstablishment for the use of the
Spenda IP is based on approximately 45% of specific software income. If the Proposed
Transaction is approved, there would be an immediate increase in the gross profit margin of
circa 45% going forward. The Company indicated that once 350 customers is exceeded, it
would be more cost beneficial to inherit Apptablisthment’s entire cost structure than to pay
the licence fees.
 The Proposed Transaction will provide Cirralto with access to Appstablishment’s existing
customer base and trading partners which can be a springboard from which Cirralto grows
its business. This provides Cirralto with a significant, immediate base for the deployment of
the Spenda Platform.
 Cirralto will benefit from the organisational structure and infrastructure of Appstablishment
that is capable of supporting growth and scaling operations, in addition to a team with
proven success in developing, marketing, implementing and commercialising software.
 Cirralto will have access to the Australian Government’s research and development tax
incentive scheme given it does not currently engage in any research and development
activities.


ASX Announcement - 4 June 2021 - "APPSTAB Aquisition Complete"
Cirralto CEO Adrian Floate said, “This acquisition enables Cirralto to take the next step in its ambition
to be a leading integrated payments provider. Appstablishment brings skilled people, know-how, IP
and an established customer base.